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Have you been keeping an eye on Yip’s Chemical Holdings Limited’s (HKG:408) upcoming dividend of HK$0.06 per share payable on the 10 October 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 03 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Yip’s Chemical Holdings’s most recent financial data to examine its dividend characteristics in more detail.

Check out our latest analysis for Yip’s Chemical Holdings

5 questions to ask before buying a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it paying an annual yield above 75% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share risen in the past couple of years?

• Does earnings amply cover its dividend payments?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does Yip’s Chemical Holdings fare?

Yip’s Chemical Holdings has a trailing twelve-month payout ratio of 44.2%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Not only have dividend payouts from Yip’s Chemical Holdings fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

In terms of its peers, Yip’s Chemical Holdings has a yield of 5.8%, which is on the low-side for Chemicals stocks.

Next Steps:

Taking all the above into account, Yip’s Chemical Holdings is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three important factors you should further research: